Family owned Matalan isn’t often talked about. The out of town fashion and home wares retailer operating at the value end of the market competes against the likes of Primark and the grocers, and is, therefore, often overshadowed. However, after a visit to one of its stores recently we got the feeling that Matalan may be about to become more of a threat to its bigger rivals.
The last reported quarter of trading ending in November 2014 didn’t make great reading, suffering as many fashion retailers did, with overly warm weather for the season, however CEO James Hargreaves also reported a resilient margin. Christmas trading didn’t fare much better but news that the retailer came out of Christmas with less residual stock than in previous years was well received as was the prediction of full year profits growth.
In 2014 Matalan moved to a bigger head office in Skelmersdale, opened its first High Street store in Cardiff and signed a lease to open its first Oxford Street store in London which is expected to open this spring. For a retailer that sits under the radar, they appear to be quietly going places.
Its main competitor Primark has a strong High Street presence which Matalan has lacked. However, we predict that the lead onto city High Streets is destined to deliver a good sales density for the retailer if the store that we visited is anything to go by. We were enthused by the clarity of communication, good product quality, strong product mix, fashion led collections, in house designer labels and very good pricing which can easily compete in its market.
Matalan has taken its time to reach the High Street, waiting for the perfect store in the perfect location, knowing that it had to be right. This has undoubtedly held the retailer back in terms of gaining market share in a growth market, but may turn out to be the right decision. Location is everything and the roll out programme to other High Streets will probably be slow.
A refinancing exercise in 2014 has given Matalan the security to invest in the brand and its future and although the efforts that we have seen in store haven’t yet translated into financial results, if Matalan keep on track we certainly expect that the results will come through in the next few seasons. As they say, watch this space.
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